Page 83 - 16. COMPILER QB - INDAS 103

The fair value of net assets of SUN and MOON limited are as follows:
Assets Sun Ltd. (‘000) Moon Ltd. (‘000)
Property, Plant and Equipment 19,000 17,000
Inventory 1,300 2,900

Fair value of the business 22,000 28,000
Solution
(a) (Assumption: Common control transaction)

1. Calculation of Purchase Consideration
Sun ltd Moon ltd
‘000 ‘000
Assets taken over:
Property, Plant and Equipment 17,000 15,000
Investment 2,100 1,100
Inventory 2,500 5,500
Trade receivables 3,600 8,000
Cash & Cash equivalent 900 800
Gross Assets 26,100 30,400
Less: Liabilities
12% Debentures 6,000 8,000
Trade payables 2,000 (8,000) 3,000 11,000

Net Assets taken over 18,100 19,400
Less: Other Equity:
General Reserve 3,000 4,000
P & L A/c 2,000 1,000
Investment Allowance Reserve 1,000 200
Export Profit Reserve 100 (6,100) 200 (5,400)
Purchase Consideration 12,000 14,000
Total Purchase Consideration = 26,000 (12,000 of SUN Ltd. & 14,000 of MOON Ltd.)

2. Discharge of Purchase Consideration
No. of shares to be issued to Sun Ltd =
.
ℎ
. .

No. of shares to be issued to Moon Ltd =
.
ℎ
. .

Sun Ltd Moon Ltd
26,000 X 18,100/37,500 = 12,55,000 1,255
Equity shares of Rs 10 each
26,000 X 19,400/37,500 = 13,45,000 1,345
Equity shares of Rs 10 each

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